P L d 2000 s c 225 (Riba prohibition stayed)

 

 

 

80.       Ibn-al-Anbari quotes another poet saying :

 

 

 

81. Rather, some contemporary writers have claimed that the nomenclature of the Arabic coins (Dirham, Dinar and Fals) is originally derived from the Greece or Latin words which are very similar to these names.” These Byzantine coins remained in use throughout the Muslim world till the year 76 A.H., when Abdulmalik ibn Marwan started coining his own Dinars.”

 

 

 

82. Keeping in view such close financial relations of the Arabs with the Roman Empire, how can it be imagined that the Arabs were totally unaware of the credit transactions flourishing in the Roman Empire? As we shall see later, the business relations of the Arabs were not restricted to Syria. They extended to Iraq, Egypt and Ethiopia as well. They were fully aware of the business style of these countries, and their awareness about the interest based transactions of these countries is reflected in an advice given by Abdullah b. Salaam (r.a.a.) (a native of Madinah) to Abu Burdah (who had settled in Iraq and came to visit Madinah). Abdullah b. Salaam warned him that he was living in a country where Riba had wide currency, and therefore, he should be very careful while dealing with other people lest he should indulge in Riba unconsciously.” The same advice was given by Hazrat Ubayy-ibn-Kab (r.a.a.) to his pupil Zirr b. Hubaish.”

 

 

Commercial Interest in Arabia

 

 

 

83. Coming to the case of Arabian peninsula itself, no one can deny the fact that trade was the most outstanding economic activity of the Arabs. Makkah, in particular, consisted of barren lands and hills with very little amount of water, and therefore, was totally unfit for cultivation. That is why commerce and trade was the basic characteristic of the economic life of the Arabs of Makkah. One of the most outstanding features of the Arabian trade was that their commercial activities were not restricted to their own land. Their main business was to export their own goods to all the surrounding countries and import their goods to their own cities. For this purpose their commercial caravans used to travel to Syria, Iraq, Egypt, Ethiopia etc. The history of these trade-caravans refers back to a period as early as that of the Holy Prophet Yaqoob (a.s.) (Jacob or Israel). It is mentioned by the Holy Qur’an that the brothers of Hazrat Yousuf (Joseph) (a.s.) had thrown him in a pit from where a passing caravan picked him up and sold him in Egypt.’’ According to historical evidence, this caravan was an Arab caravan consisting of the children of Ismail (a.s.) who had embarked on a business tour to export goods to Egypt. This fact finds mention in the Old Testament of the Bible itself which says:

 

 

 

And they sat down to eat bread: and they lifted up their eyes and looked, and, behold, a company of Ishmaelites came from Gilad with their camels bearing spicery and balm and myrrh, going to carry it down to Egypt.31

 

 

 

84. This Arab caravan was going to export spices, balms and perfumes in such an early period to such a distant country, the Egypt, that was thousands of miles away from the centre of Arabia. It may show the extent to which the Arabs had deployed their courageous entrepreneurship right from the beginning of their history.

 

 

 

85. Naturally, the commercial activities of the Arabs kept on increasing in the later days, so much so that they were identified as a trading nation. How far their international trade had flourished before the advent of Islam has been detailed by the historians, and it is neither possible nor necessary to give all these details here’, but the fact that the Arabs were trade-oriented people can hardly be questioned by a person who has studied their history. The importance of their trade caravans can be assessed by the fact that the Holy Qur’an has revealed a full Surah (Al-Quresh) to denote that their business towards Yemen in winter and towards Syria in summer were a blessing from Allah on account of their services to Kabah. The Holy Qur’an has specifically mentioned the term ilaaf which refers to the commercial treaties the Arabs of Quraish had with different nations and tribes.°’ The size of these caravans may be imagined from the fact that the caravan led by Abu Sufyan at the time of the Battle of Badr consisted of one thousand camels and had returned with 100% profit (one Dinar for every Dinar).

 

 

 

86. Obviously, the caravan of this huge size could not be owned by any one individual. It was a collective enterprise of the whole tribe and was funded, by the contributions of all the members of the tribe like a joint stock company. The historians have noted that:

 

.          

 

There remained no male or female in the tribe of Quraish who had one misqaal of gold and had not contributed to the caravan.

 

 

 

 87. It was not only the caravan of Abu Sufyan that was funded in this manner. Almost all the big caravans used to be organized on the same pattern.

 

 

 

88. Keeping this commercial atmosphere in view, one can hardly imagine that the Arabs were not familiar with commercial loans, or that their loans were restricted to consumption purposes. But apart from hypothesis, there are concrete evidences that they used to borrow money for their commercial and productive needs. Some of these evidences are summarized below:

 

 

 

(a)        Dr. Jawad Ali, whose extensive research about the Arabs of Jahiliyyah is appreciated throughout the academic world, has analyzed the funding sources of these caravans and has remarked as under:

 

 

 

 

 

 

 

 

 

what the historians have narrated about the caravans of Makkah reveals that the capital of a caravan never used to be the capital of one individual or a particular family; it rather belonged to the traders of different families and to those individuals who themselves had money or had borrowed it from others and had contributed it to the capital of the caravan with a hone to earn huge profit.” (Underlining is ours)

 

 

 

The underlined sentence shows that these caravans used to be funded, inter alia, by the commercial loans. .

 

 

 

(b)        All the books of tafseer have mentioned the background of the verses of Surah al-Baqarah dealing with Riba. Almost all of them have reported that different tribes of Arabia ‘used to take interestbased loans from each other. For, example, Ibn Jarir al-Tabari says:

 

 

 

The tribe of Banu Amr used to charge interest from the tribe of Banu al-Mughirah and Banu al-Mughirah used to pay them interest.”

 

 

 

These loans were not taken by one individual from another. Instead, the tribe as a collective entity used to borrow money from another tribe. We have already shown that the tribes of Arabia used to work as a joint stock company for the purpose of funding their trade-caravans and in order to undertake their joint enterprise. Therefore, the loans taken by one tribe from the other were not for the purpose of consumption only; they were certainly commercial loans meant to finance their commercial ventures.

 

 

 

(c) While explaining the verse of Surah Al-Rum (30:39), already quoted in para. No.17 of this judgment, Ibn Jarir al-Tabari has reported the view of some earlier commentators of the Holy Qur’an that this verse refers to the practice of some people in Jahiliyya who would finance some others to increase the wealth of the recipients.  Ibn Jarir has supported this view by the following statement of Hazrat Ibn Abbas (r.a.a.):--

 

 

 

Have you not seen a person saying to another, I shall certainly finance you then he gives him? So, this does not increase with Allah, because he gives him not to please Allah, but to increase his wealth.

 

 

 

He has also quoted the following statement of Ibrahim al-Nakhai in the same context:

 

 

 

It was in the days of Jahiliyya that one used to give money to one of his relatives to increase his wealth.”

 

 

 

Obviously, financing for the purpose of increasing wealth of the recipient means that the recipient would invest this money to earn profit and thereby increase his wealth. These statements of Ibn Abbas (r.a.a.) and Ibrahim al-Nakhai clearly show that the practice of financing for productive purposes was so prevalent in the Arab Society that, according to these commentators, the verse of Surah al-Rum was revealed in that context.

 

 

 

(d)        The concept of commercial loan finds mention in a hadith of the Holy Prophet (p.b.u.h.) himself, which is reported by Imam Ahmad, Al-Bazzar and Al-Tabarani from Abdurrahman-ibn-AbiBakr (r.a.a.). According to him, the Holy Prophet (p.b.u.h.) has said:

 

 

 

Allah Almighty will call a debtor on the Day of Judgment. He will stand before Allah and will be asked: O son of Adam, why did you take this loan and why did you violate the rights of the people?, He will say, My Lord, you know that I have taken this loan, but neither used it in a eating or drinking nor in wearing clothes nor in S doing something, instead, I was afflicted either by fire or by theft or by a business loss. Allah will say, My slave has told the truth. I am the best One who will pay today on your behalf.

 

 

 

The underlined words contemplate that this person had borrowed money for commercial purpose whereafter he suffered a business loss. It, shows that the concept of the loans taken for commercial purposes was quite’ clear even in the mind of the Holy Prophet (p.b.u.h.) .

 

 

 

(e)        The Holy Prophet (p.b.u.h.) has, in another authentic hadith reported by Imam Bukhari, narrated the story of an Israelite person who had borrowed one thousand dinars from another person and then embarked on a sea voyage.” Some other reports have expressly mentioned that this borrowing was for commercial purpose.” Moreover, such a huge amount cannot be borrowed for normal consumption needs, and the hadith mentions that the borrower set out on his sea voyage and after the date of maturity he earned so much that he sent one thousand dinars to his creditor, and offered to pay him the same amount once more under the impression that the first payment did not reach him, but the creditor admitted that he had received the amount and, therefore, he refused the debtor’s offer to pay him once more.

 

 

 

There is another example of where the Holy Prophet (p.b.u.h.) himself has referred to a commercial loan.

 

 

 

(t)         Apart from the practice of the trade caravans detailed above, there are many examples to show that the commercial loans used to be given and taken on individual level as well. Some of the examples are given below:

 

 

 

(i)         Abu Lahab, the uncle of the Holy Prophet (p.b.u.h.) was one of the most inimical persons towards him, but he did not participate personally in the Battle of Badr. The reason was that he had advanced a loan of four thousand dirhams on interest to one Asi-bin-Hisham and when he could not repay it, he hired his debtor against his loan to replace him in the battle. Obviously, this amount of four thousand dirhams was too big (in those days) to be borrowed by a starving person to satisfy his hunger. It was certainly borrowed for the purpose of trade which could not bring fruit and the debtor stood bankrupt.

 

 

 

(ii)        It is reported by several books of hadith and history that Hazrat Zubair Ibn Awwam (r.a.a.), was one of the richest companions of the Holy Prophet (p.b.u.h.). On account of his credibility people wanted to deposit their money with him in trust, but he refused to receive any deposit from any one unless he gives it to him as a loan. It was beneficial for the depositor, because after treating it as a loan, Hazrat Zubair (r.a.a.), was liable to repay it in any case, while in the case of a simple deposit in trust, he would not be liable to repay if the amount is lost by theft, fire etc. Once the people deposited money with Hazrat Zubair (r.a.a.), as a loan, he invested the money in trade. The manner in which Hazrat Zubair (r.a.a.), used to receive deposits and invest them in trade is very similar to a private bank. It is reported by Imam Bukhari that his liabilities toward his depositors were calculated, at the time of his death, to be two million and two hundred thousand, and all this amount was invested in commercial projects.”

 

 

 

(iii)                   Ibn Saad has reported Hazrat Umar (r.a.a.) wanted to send a trade caravan to Syria, and for that purpose he borrowed four thousand dirhams from Hazrat Abdurrahman-ibn-Awaf (r. a.a.)

 

 

 

(iv)       Ibn Jarrir has reported that Hind daughter of Utbah and wife of Abu Sufyan borrowed four thousand dirhams from Hazrat Umar (r.a.a.), for the purpose of her trade. She invested this money in purchasing goods and selling them in the market of the tribe of Kalb.

 

 

 

(v)        Al-Baihaqi has reported that Hazrat Miqdad-ibn-Aswrd (r.a.a.), borrowed seven thousand dirhams from Hazrat Usman (r.a.a.).` Obviously, this amount was not borrowed by a poor person for his consumption needs, because Hazrat Miqdad, the borrower was of the rich Sahaba who was the only one riding a horse in the battle of Badr and whose agricultural produce was purchased by Hazrat Muawiyah (r.a.a.), for 100,000 dirhams.”

 

 

 

(vi)       When Hazrat Umar (r.a.a.) received the fatal blow from a Christian, he called his son and directed him to calculate the amounts he owed to his creditors. His son calculated the amount and found that it was 80,000 dirhams.” Some people advised Hazrat Umar (r.a.a.) to borrow this money from Baitulmal, so that he may relieve himself from his liability towards the people and that the debt of the Baitulmal might be settled after selling his assets, but Hazrat Umar (r.a.a.) rejected the suggestion and directed his sons to pay the amount from his own assets.” Obviously, this amount of 80,000 dirhams could not have been borrowed for personal consumption.

 

 

 

(g)        Imam Maalik has reported in his Al-Muwatta that Abdullah and Ubaidullah, the two sons of Hazrat Umar (r.a.a.), went to Iraq for the purpose of Jihad. While coming back they met Abu Musa Al-Ashari (r.a.a.) the Governor of the City of Basra. He told them he wanted to send some money of the public exchequer to Hazrat Umar (r.a.a.) in Madina. Instead of giving them that money in trust, he suggested that he gives it to them as a loan so that it may remain in the risk of Abdullah and Ubaidullah and may reach safely to Hazrat Umar (r.a.a.) and it was beneficial for Abdullah and Ubaidullah as well because after taking the amount as loan, they could purchase some goods from Iraq and sell them in Madina and after settling the principal amount to Hazrat Umar (r.a.a.), they could earn some profit. They accepted the suggestion’ and acted accordingly. When after reaching Madina they paid the principal amount to Hazrat Umar (r.a.a.), he asked them whether Abu Musa (r.a.a.) had given such a loan to all the members of the army as well. They replied in negative. Hazrat Umar (r.a.a.) said, `he has given you this loan only because of your relationship with me, therefore, you will have to return not only the principal but also the profit earned through it’. Ubaidullah Ibn Umar objected that this decision was not just, because if the goods purchased by them were destroyed in the way, they would have borne the risk and were table to pay the principal amount in any case, therefore; they deserve the profit they earned. Still Hazrat Umar (r.a.a.) insisted to return the profit to Baitulmal. One of the persons present at that time suggested to Hazrat Umar (r.a.a.) that instead of claiming all the profit from them, he might convert this transaction into Mudarabah through which half of the profit would be deserved by Abdullah and Ubaidullah and the remaining half would go to Baitulmaal. Hazrat Umar (r.a.a.) accepted this proposal and acted accordingly.”

 

Obviously the loan advanced to Abdullah and Obaidullah in this case was a commercial loan contemplated from the very beginning to be invested in trade.

 

 

 

89. The above material is more than enough to prove that the concept of commercial loans was not alien to the Holy Prophet (p.b.u.h.) or his companions when Riba was prohibited. Therefore, it is not correct to say that the prohibition of Riba was restricted to the consumption loans only and it did not refer to the commercial loans.

 

 

 

Excessive Rates of Interest

 

 

 

90. Another argument advanced on behalf of some appellants was that the prohibition of Riba is applicable only to those interest transactions where the rate of interest is exorbitant or excessive. This argument is sought to be supported by the verse of Surah Al-Imran;

 

 

 

those who believe, do not eat Riba doubled and redoubled (3:130)

 

 

 

91. It is argued that this verse of the Holy Qur’an is the first verse that came with a clear prohibition of Riba, but it has qualified the prohibition by the words “doubled and redoubled” to denote that the practice of Riba is forbidden only when the rate is so excessive that it makes the payable amount twice that of the principal. The logical result of this expression would be that if the rate of interest is not so high, the prohibition is not applicable. The interest charged in the present banking system, it is argued, is not normally so high as to make the payable amount double the principal, and, therefore, the banking interest is not covered by the prohibition.

 

 

 

92. This argument overlooks the fact that the different verses of the Holy Qur’an relating to the same subject must be studied in juxtaposition with each other. No verse can be interpreted in isolation from the other relevant material available in other parts of the Holy Qur’an. As explained at the very beginning, the Holy Qur’an has dealt with the subject of Riba in four different chapters. Obviously, no verse can contradict another verse on the same subject. The most detailed treatment of the subject of Riba is found in Surah AI-Baqarah, the relevant verses of which have already been quoted and translated in paragraph 15 of this judgment. These verses include the following command:

 

 

 

O those who believe fear Allah and give up whatever remains of Riba, if you are believers.

 

 

 

93, The words “whatever remains of Riba” in this verse indicate that every amount over and above the principal has to be given up. This point is further clarified in express terms by the following sentence -

 

 

 

And if you repent (from the practice of Riba) then you are entitled to get back your principal.

 

 

 

94. These words do not leave any ambiguity in the fact that repentance from the practice of Riba is not possible unless any amount exceeding the principal is given up and that a lender is entitled only to the principal he has actually advanced. A combined study of the verses of Surah Al-Imran and Surah Al-Baqarah leaves no doubt in the fact that the words “doubled and redoubled” occurring in Surah Al-Imran are not of restrictive nature, and that “doubled and redoubled” is not a necessary condition for the prohibition of Riba. These words have rather been used to refer to the worst kind of practice of Riba rampant at that time.

 

 

 

95. In order to fully understand the point, we must refer to one of the basic principles of the interpretation of the Holy Qur’an. The Holy Book is not originally a statute book meant to be used as a legal text. It is a book of guidance which, along with certain laws or commandments, embodies many expressions having persuasive value. Unlike the text of a statute book, the Holy Qur’an contains some words or expressions used either for emphasis or for explaining the evil results of a particular act. They are not meant to be taken as a restrictive qualification for the command or the prohibition preceding them. A self-evident example of this style of the Holy Qur’an is the verse which says:

 

 

 

“Do not sell my verses for a little price. (AI-Baraqah 2:41)

 

 

 

96. Nobody can take this verse -to mean that selling the verses of the Holy Qur’an is prohibited only because the price claimed is very low and that if the verses are sold for a higher price, the practice can be held as permissible. Every person of common sense can easily understand that the words “for a little price” used in this verse are not of restrictive nature. They are rather meant to indicate the evil practice of some people who used to commit the grave sin of selling the verses of the Holy Qur’an and still did not gain much in financial terms. It never means that the blame is directed towards the ‘little price’ they gain; rather the blame is directed to the selling of verses itself.

 

 

 

97. Similarly, at another place the Holy Qur’an says:

 

 

 

“And do not force your slave girls to prostitution if they want to remain chaste.” ( AlNoor 24:33)

 

 

 

98. Obviously it does not mean that if the girls do not want to remain chaste, one can force them to prostitution. What the verse means is that although the prostitution in itself is a grave sin, yet it becomes all the more evil if a girl is forced to indulge in this profession while she intends to remain chaste. The words “if they want to remain chaste” are not of restrictive nature meant to qualify the prohibition with their desire to remain chaste. These words have been added only to indicate the increased severity of the crime. It is in the same style that the words “doubled or redoubled” have been used with Riba in the verse of Surah Al-Imran. They are not intended to qualify the prohibition of Riba with doubling or redoubling. They are only meant to emphasize the added severity of the sin if the interest charged is so exorbitant or excessive. This intention of the verse of the

 

Holy Qur’an is quite evident in the light of the verse of Surah Al-Baqarah already quoted above.

 

 

 

99. Secondly, the interpretation of the Holy Qur’an should always be based on the explanation given by or inferred from the hadith of the Holy Prophet (p.b.u.h.) and his noble companions who were the direct recipients of the revelation and were fully familiar with the context of the verse and the environment in which it was revealed. From this aspect as well, it is certain that the prohibition of Riba was never meant to be restricted to a particular rate of interest. The prohibition was meant to cover every amount charged in excess of the principal, however, small it may be. The following hadith are sufficient to prove this point: